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tv   Closing Bell With Maria Bartiromo  CNBC  October 15, 2012 4:00pm-5:00pm EDT

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just off the high of the session. this is the first monday in a while we're finishing positive for the stock market. it got to be a trend in the last couple of months. right now the dow up about 100 points. glenn hubbard is coming up. is he the next fed chairman? maria talks to him exclusively on the second hour of the "closing bell." i'll see you tomorrow. it is 4:00 on wall street. do you know where your money is? welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange on monday. stocks rebounding today from the biggest selloff in more than four months, following better than expected numbers from citigroup and better than expected retail sales data. see how things are settling out. dow jones up 0.75%, 95 points higher, 13,424. nasdaq up 3,064. s&p 500 up 11 points, and 1440
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and change. we go straight to the market action today. we have a big week ahead with major names set to report quarterly earnings this week. will investors get what they want for short-term boost? bill with me, south tech's money management jim key and fusion analytics josh brown and our own rick san tetelli. thank you for joining me. bill, what are you expecting out of this slew of earnings this week? >> i think the theme is going to be get over the summer doldrums, all of the nasties that have made people stop and think and worry. i think we have to jump over this quarter and look ahead. and that is the ball game. i think in the next two or three weeks, you're going to see powerful stuff that's going to get people moving into hard action. >> you want to put money into stocks then? >> i want to be in stocks. i want to be in real estate. i want to be in everything but gold or bonds. >> why? >> those two are the two nastiest categories. i learned a lot time ago, 35 years, when people do things in
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mass, it's usually dead wrong. every dope wants to buy gold and everybody is buying bonds, bonds, bonds. returns are zero. compelling rates of return available to those that want to lift the lid and take some risks. now it's time to take risks. >> what do you think, jim, you agree with that, you want to take risk right here? >> well, we do. i think the market's not expecting a lot of great news from earnings. i think the global supply chain plays will miss. and i think we'll see a little bit of that already with alcoa and some energy companies. other than that, i think the company's to the upside will actually have a big boost or positive surprise. >> i guess there's an argument to be made that even if we were to see a contraction of earnings, we've hit the worst. in fact, now, you know, going forward and what's ahead looks a bit better, even though 2013 is up for grabs here. is that the way you're seeing it, is this the bottom in terms of earnings?
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>> i hope so. i hope what we're seeing is bottoming and tearing up of some gloeblg pmis and global indices. i know global risk measures are down. so it's important to look ahead and not backwards. i think we're seeing the v vestiges. >> rick santelli, what do you think? >> i think the bigger question is, we've seen a huge amount of people, investors fleeing the equity complex. our first guest said he wouldn't touch gold or bond. why are all investors enamored with bonds? i think it's an actual positive story. it isn't whether anyone rationale would be there. they are there. the key is how much gets locked to go into more productive investments at some point down the road? what unlocks that magic door? and i think that merits so much more time. in terms of quantitative easing three, as many have said, pegs what's going on in equities, the talk is we're back to the september 12 '12-'13 levels.
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but that foreforegoes do you dr. leading to that fed meeting when people investors anticipated qe3 on the way. >> it has been a qe3 rally, we know that. a qe rally, really. do you want to stay on this train? >> your time horizon is anything greater than five years, it would be irrational for you to be hoping for anything but a selloff. you should look for great companies that have a lousy earnings report as an opportunity to buy them, knowing full well that the first half of 2013 may or may not be the earnings bottom but it won't matter in the end. nobody should be rooting for the market to go up on bad fundamentals because that doesn't set up great buying opportunities. the way we're looking at this earnings season is let's get all the negativity out. i think your first guest said something similar and look for companies that hold up the best because those are the ones that are cherished by portfolio managers and inflows will come back to stocks.
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and when they do, those will be the stocks that lead us higher. >> which ones are they? which holds up the best? >> which will hold up the best? >> yeah. >> right now we're overweight health care. we like almost every subsector within health care. we think that portfolio managers will be loathe to sell these names, one of the few areas with both, a demographic tailwind along with some secular growth. actually, if you look at raw accumulation distribution in the form of price, if you look at the charts, the charts are telling you these stocks are under accumulation and should be bought on any dip. you know, that's where we would be betting. >> just looking at qe, i mean, bill gross with his treat today, i want to get all your takes on this, he tweets out pimco ceo bill gross says, even with high octane qe, asset prices seem to have plateaued. find safe carry and be content. so, he's looking at a plateauing in terms of equities right here, jim key. you're on the other side of that trade? >> i am long term anything 6 to
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12 months or beyond. near term, two to three months. i think we could see a narrow trading range. i do like the companies domestically oriented for this earning season. the ones tied more to the global economy i think are going to be disappoint. >> because they're impacted by china? >> yes. slowing emerging markets in general. that's still where the growth is but a much slower pace than what we've seen in the recent one to two years. >> bill, does the election matter for this market? does who wins the white house dictate where this market goes after november 6th? >> i think that is the ball game short term big time over the next three, four, six, eight weeks. what will happen is that fiscal cliff will be knocked to shreds as people say no more of this. we can't balance our budgets. if we have a compelling large win in the house for the house and the senate, i think that's something that nobody's paying attention to.
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there's trillions of dollars that will go back to work when people believe. >> maria u i agree with that. >> you're not going to make me part with my money unless i believe. that's the ball game. >> i totally agree. >> what does that mean? who wins -- who is better for the stock market? >> it's not who wins. it's resolution. it's not who wins. it's never been who wins. because we can go -- >> it's just clarity. >> we can go back to -- >> i beg to differ. >> okay. >> i beg to differ. >> who is better for the economy -- go ahead. >> if romney wins as big as i think he's going to, america's going to speak loudly and there's going to be big money made ahead for those that have decision-making capabilities, willingness to go out and take risks. >> should i guess then if obama wins it's the opposite? >> well, if obama wins by a small margin and loses the house and the senate, different story, but i don't think that's going to happen. >> do you know that the first -- the first dip in this three-month rally in the stock market occurred literally right around the time where mitt
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romney was so dominant in that last debate. why did that dip happen? because everyone happens -- >> the ben bernanke effect. >> everyone understands that. should we say because romney is more pro business, that's better for the stock market? when they right the textbook on obama's first four years, they would have to include without context that he's the best president for stock market history. >> wow. you also have to coincide that with the federal reserve and all central bank easing around the who world. >> that's the whole point. >> that's not obama. that's central bank. >> i agree with that. you have to take in more than who's in the white house to come up with an opinion like that. i agree. >> you'll see. >> fdr had a pretty good stock market as well. >> okay. guys, look, this is probably the biggest election of our time, for sure. we'll be watching and of course, cnbc will have live coverage of the second presidential debate tomorrow night. join us 8 p.m. eastern for that. gentlemen, we'll see you soon. we'll be watching this market activity. thank you very much.
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bob, you think this rally is sustainable? we're heading into a lot of earnings this week. >> we are. but so far the economic numbers have been pretty good. we closed just off the highs for the day. this morning september retail sales were terrific, across all the categories. everything was up. a surprise, people raised their gdp numbers. the s&p 500. for all concerned about the recent weakness, we're less than 2%, maybe 2.2% from the four-year highs we hit just a few weeks ago on the s&p 500. next up is going to be housing starts. that will be wednesday. did you see housing stocks today? all had a nice move to the upside. we'll see what happens there. there is some bets out there numbers will be better than expected. banks had a he very good day. good earnings overall. citi beat, jpmorgan beat, wells fargo has a little problem with margins but most of the all the bank stocks were on the upside. good day for drug stocks but lily with positive results on gastric cancer drug and abbott
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with positive from hepatitis c drug. most stocks near 52-week highs. there could be a lot of market catalyst this week with nearly 16% of the s&p 500 set to report earnings for the last quarter. mary thompson breaking it down with the big names on the earnings calendar. >> you know that 12 of the dow 30 report tomorrow. five tomorrow, cluntd newest member united health care. investors will be keeping a close eye on coca-cola's report for hints about consumer sentiment. intel will be reporting and investors will be keeping a close eye on that for clues about demand for pcs, as well as the impact on wayning pc demand. how that will impact the average selling price of intel's chips. bank of america reports before the bell. investors will focus on any growth in the bank's businesses. american express reports after the bell. i know vesters focus there on how the firm is controlling expenses and listening for clues
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how they'll make money on growing its prepaid credit card business -- the credit card company, not the bank. travelers, microsoft and southwest report on friday. and friday closes out with reports from general electric where quarterly profits are seen rising 17%. mcdonald's, revenues report to be flat, earnings up slightly. >> thank you so much. we have a lot more ahead on this big monday edition of the "closing bell." back in a moment. >> announcer: focus on the fed. he's considered a top candidate to replace ben bernanke if mitt romney wins the presidency. but does former council of economic advisers chairman glenn hubbard want the job? would he cut back on the fed stimulus if he gets it? plus, getting a fiscal house in order. >> this uncertainty is going to increase as we get closer to year end. and it is a closer. >> announcer: imf managing director christine lagarde sits
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down with maria to discuss everything from the looming fiscal cliff to how high taxes could be heading around the world. that's all ahead on the "closing bell." son bought from us online today. so, i'm happy. sales go up... i'm happy. it went out today... i'm happy. what if she's not home? (together) she won't be happy. use ups! she can get a text alert, reroute... even reschedule her package. it's ups my choice. are you happy? i'm happy. i'm happy. i'm happy. i'm happy. i'm happy. happy. happy. happy. happy. (together) happy. i love logistics.
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welcome back. 12 million jobs in four years. in is among the promises mitt romney is making along the campaign trail, he'll repeal the obama health care plan and not raise taxes. how he'll get this done, glenn hubbard who helped write the romney plan, is here. new york times is called the romney go-to economist. some worry the romney plan looks very familiar. glenn hubbard joins me on a first on cnbc interview to talk about that and a lot more. good to have you on the program. >> thanks. pleasure. >> let's talk about romney's economic plans and the promise he can lead a situation to create 12 million jobs in four years. you say it's possible. >> well, it's certainly possible. the country's done it many, many times in recoveries. we're just not doing it in this one. to have a pace of 250,000 jobs a month on average is easily
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possible f we had a different policy mix that reduced policy uncertainty, got the budget house in order and did tax reform. we've done this many times in the country. >> okay. so in terms of specifics, in terms of projects that you think romney will okay, and that would get jobs going, does it include energy? talk to us about sort of specifics because lots of people want specifics in terms of how he's going to get those jobs going. >> sure. going through the specifics, first on the tax side, making our corporate tax system much more competitive leads to investment and job creation here in the united states. the general cut in marginal tax rates, the governor advocates, will increase small business creation. on the energy side, removing and improving energy regulations that would limit domestic production and distribution, particularly in natural ga gas are also big job creators. the governor said he would move forward on many trade agreements the administration has let slip. all of this across the board,
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very, very much pro growth and very much what the economy can do. >> and the point is, is to get back to growth. once you have a growing economy, that will create the revenue required to actually put it down on the deficit, is that what you're saying? >> no. the deficit and debt comes from reducing the trajectory of government spending. tax cuts don't pay for themselves. tax reform requires base broadening and bringing down the deficit requires hard choices on spending, as gov more romney said. >> looking at this new york times, martin bailey was one of the critics of the romney economic plan. he's basically saying the plan looks like a the bush plan, the tax cut plan out of president bush. he said the tax cuts left the country with the wherewithal to battle the recession. how do you look at martin bailey's criticisms and come up with plans to offset that? what is your answer to that?
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>> governor romney is proposing a very different plan from president bush. he's planning to decelerate the growth of government spending. as we know, spending accelerated in bush years. not a desirable thing at all. romney is proposing tax reform. it cuts marginal rates, that's correct, but also broadens the tax base. this is much more akin to bowles/simple son or 2005 president advisory commission, the kind of things the country used to talk about is the gold standard. >> do you think gov more romney is going to be articulating this tomorrow night? there's a real push. the media wants specifics on his economic plan. we know the president has been gearing up for tomorrow night's debate after the last debate where many people said he did not do as well as the governor. what are you expecting from governor romney tomorrow night? >> i expect him to continue to do what he has been doing, articulate a pro growth message,
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category by category, and explain how it leads to growth in jobs. if you look at the economic report of the president, under president obama, he claims he can create 12 million jobs. seriously, does any economist believe the policies he's proposing could lead to that? i think that's the kind of tension you'll see. >> another topic of much debate is the fiscal cliff. christine lagarde has been warning about it. she talked about it again. we'll have that interview coming up when i saw her this weekend in japan. how can both sides come together on this issue? you know, if we constantly see fighting on both sides of the aisle, nothing gets done. >> you're absolutely right. we should not be going through this. we first have a crisis of leadership. and i think what governor romney said, look f he's elected president, he'll work with the congress to get a tax plan and a budget plan that meets the objectives. whether president obama wins or governor romney wins, the two sides have to come together and get this done. we've had a failed leadership. >> what emplabout your own plan
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lot of talk you've been named among the front-runners to take over for federal reserve chairman ben bernanke or even treasury secretary if governor romney wins the white house. if offered those, would you take the jobs? >> i think the new york times story had the psychedelic 1960s look a look. i'm very happy in the job i have. >> you've been advising governor romney. what's the end goal? >> to make governor romney president of the united states. i think he would be a great economic leader. >> you think we'll see a difference in 2013, 2014 and beyond as a result of those policies over president obama's? >> nite there's no doubt in my mind that if we move to pro growth policies we'll see the kinds of recovers we've seen before. you know, it is not true that it's inevitable to grow more slowly after a financial crisis. simply not true. >> the president has been on the campaign trail -- i believe it was today or yesterday he said he's cut taxes for small business 18 times. >> but the president has
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proposed raising attacks on small businesses around the corner. if you add up his small business tax increases, they trump anything he's ever done. a great study by the american enterprise institute on this just this week. >> but he is being -- you know, he is looking at people in the eye saying, i've cut taxes for small business 18 times. i don't understand. who's right? we have scott cohen on the truth squad but he's saying it on the campaign trail right now as he speaks. what's the answer? you're saying it's absolutely not true? >> it's absolutely not true. he's proposed large tax increases on small businesses going forward. that will make it harder for them to create jobs and harder for them to invest. there's no way to sugarcoat that. >> no way to sugarcoat that. tell me one of the most important things you want to come out of tomorrow night's debate on governor romney's side. what is the most important thing you think he'll be saying to convince the american people of something that you believe that he should be the president. >> well, i think two things. one is clarity about his own economic vision, which i believe is strong and the right one.
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the other is to ask the president simple questions. which policies is he proposing that could actually raise growth? how would he plan to pay for the spending increases in his budget only by raising taxes on high-income people? the numbers just don't add up. >> we'll leave it there. thanks so much. glenn hubbard joining us. don't miss special coverage tomorrow night of the second presidential debate, 8 p.m. eastern on cnbc. where's the beef? restaurants are chopping down portion sizes to deal with higher commodity prices. economists say brace yourselves, the worse is yet to come. and then -- >> we would rather have a program that is difficult but credible rather than a program that is going to be so difficult that it is not credible. >> she's talking about austerity. head of the international monetary fund softening her stance on greece. my interview with christine lagarde coming up. also ahead, do president
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obama's tax policies put a big drag on small business's bottom line? someone says absolutely. wait until you hear his take. back in one minute's time. i've been a superintendent for 30 some years at many different park service units across the united states. the only time i've ever had a break is when i was on maternity leave. i have retired from doing this one thing that i loved. now, i'm going to be able to have the time to explore something different. it's like another chapter.
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we go with a market flash update. >> big mover after hours. take a look at shares of bank rate, plunging 21% after announcing third quarter results will not meet street estimates because of adjustments to its insurance leads business. now expects its q3 earnings per share to come between 11 to 13 cents versus a street estimate of 20 cents a share. the stock down better than 20%. >> thank you so much. if you've been grocery shopping recently, you're probably getting sticker shock when you check out. sharon is looking at moves across the board. >> grain prices today, and today's grain prices were lower, across with many commodities, but look at what grains have done since the drought this summer. since june 1st. we're looking at steep rises in the price of corn, wheat, oatinoats, up over 30% for each of them.
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what's the demand picture with already the low level supplies we know about? the usda will issue a new report on supply and demand on thursday. that could give us more room to know where these prices may be headed. right now, what we've seen, of course, over the last several months certainly keeping a floor here on how far grain prices may fall, even on a down day for commodities like today. back to you. >> sharon, thank you so much. wholesale food costs have been skyrocketing. more than 8% last year. the biggest jump in about 30 years. looks like restaurants and customers in turn are paying the price here for higher costs on the whole sale level. restaurants big and small are a year into raising pricings. and in the aftermath of this summer's drought in the midwest, some are predicting the rising prices will get worse. who's the winners and losers in your portfolio? we'll tell you why kraft food should be on your buy list, and one says bob evans farm is one stock to avoid. thank you for joining us. steven, let me kick this off
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with you. you say price increases are going to continue and we'll see even more in 2013. who has been the hardest hit and where do you want to avoid? >> where we see the hardest hit is companies that have higher exposure to some of the land-based proteins. primarily in beef and pork. less effeaffected are names wit higher exposure to seafood and coffee. one name to avoid, as you mentioned, bob evans, has about 33% of its total food costs in sows, the heavy pigs that are used for some of the pork products. that's not priced -- not on a contract basis. that's one reason we would hold off on this stock right now. >> why do i want to be avoiding those companies that are raising prices? wouldn't that be a positive? i know thatmers ultimately gets hit but if they're raising prices, what does that do for margins? >> margins can be helped by raising prices. the question is, how much of these items can be entered into contracts?
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that's why we like some of the companies that have bigger supply chains, like darden and brinker, parent company of chili's. >> erin, you say packaged food companies are not going to feel it much. how are they leveraged for rising expenses for wholesale products? >> we don't expect much impact this year. we think because of hedging and forward buying agreements we think their exposures will be pushed off into next year. so, that's something we're paying attention to. in addition, grains make up just a small portion of their total cost of goods. so, you have offsetting declines in other commodities that are offsetting higher grains. >> so, where do you want to avoid and where do you want to be allocating capital in the food area, then, from your standpoint, erin? >> from our standpoint you want to avoid companies that don't have a strong brand or were
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private label penetration is significant. particularly areas of the grocery store where consumers make decisions based on price rather than brand. cheese and packaged meats would be two that come to mind quickly. companies that maintain strong brands and where consumers are more opt to pay up would be areas to pay attention to. confectionary one category considered a luxury. >> i see. how much is this going to cost us? let's talk basic, pocketbook yishlz for viewers. i know you like darden and brinker. you say they're best leveraged against higher prices but what price increase can we expect at their chains? how significant? >> these two companies have been pretty consistent with menu pry increases. darden, its less than 2%. brinker about 1% or so. the reason why brinker's been doing so well is they've done a lot of things in the back of the kitchen and are making their
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kitchens more efficient and labor more efficient enabling them to take less price than what's needed. they've already talked about 2% to 3% food cost inflation but they think as a percent of total sales they can hold that line flat on a year-over-year basis. i think in that kind of environment, that's a good thing. >> erin, your top pick among food groups is kraft food group. why is this a standout? >> we think this is a standout because as part of the consolidated kraft business, they were underinvested. as new management group invests behind product innovation and market support, we think there's going to be significant growth behind these more mature brands. in addition, they pay a very significant dividend that's yielding over 4%. so we think income investors will find the shares appealing. >> we'll leave it there. thanks, both of you. appreciate your time tonight. we'll see you soon. we'll be watching all those moves at the checkout counter. up next, another day,
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another stark warning about the looming fiscal cliff. >> these uncertainty is going to increase as we get closer to year end. and it is a concern. >> the international monetary fund's christine lagarde one-on-one with me next from japan. we'll also get her take on europe's debt crisis, france's 75% tax rate and a whole lot more. later on the new study shows president obama's tax policies will inflekt, quote, significant harm on small business. does this allegation have legs? just how bad could things get? we'll debate this contentious issue coming up. [ horn honks ]
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from td ameritrade.
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welcome back. the finance minister of germany says graes will not dae fault on
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latest publicly issued bonds. germany wants, of course, stiff austerity measures put in place. imf managing director christine lagarde told me this weekend it's not necessarily the best plan. >> the key thing you see is that the country be back on track. the country be able to re-access market. if we put on them obligations they simply cannot deliver on because it's too hard and too much, the program is not going to be credible. so, our position is that we would rather have a program that is difficult but credible, rather than a program that is going to be so difficult that it is not credible. >> just unrealistic. of course, central banks around the world providing stimulus. but when is it too much? what is your opinion in terms of all of this free money and stimulus that is coming from so many central banks around the world? can you keep doing that or do you need fiscal policy at some
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point to replace some of the monetary policy changes? >> see, i think that one cannot replace the other. and it works both ways. the monetary policy by the central banks will not replace fiscal policies decided by governments and vice versa. they have to, you know, go together. and clearly both in the u.s. and in the eurozone, central bankers are saying, you know, we've done our bit. where are you, governments, with your fiscal measures? and that's what's needed. >> in terms of france, what do you make of the latest policy there in terms of rates, tax rates up to 735% on the highest earnings? is this appropriate? >> i'm afraid i'm going to disappoint you because i won't take up questions on france for obvious reasons. >> because it's your country? >> correct. >> it does seem a little aggressive from a policy standpoint, do you think we could see that kind of tax rates in other countries?
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i mean, this is a real debate. i understand you don't want to criticize or comment on something going on in france. but you have to be thinking about this. >> well, what we say is that, you know, deficit reductions come two ways. you reduce the public spending or you increase the revenue, meaning you increase the tax. our sense is that, and our studies actually show, that by reducing public spending, you generally reduce deficit in a more efficient way. as far as revenue is concerned, it's often more efficient to have a large base and a small rate rather than a very high rate and a very small base. but those are general terms that, you know, are not country-specific. >> these are the issues we're dealing with in the united states every day. so what's your take on the fiscal cliff in the u.s.? you have been very vocal in terms of warning that this is -- has real implications.
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what is your take on where we are in the u.s. and that fiscal cliff? >> the imf has been warning for quite a while about the uncertainty risk associated with the fiscal cliff and the debt ceiling. both of them. this uncertainty is going to increase as we get closer to year-end. it is a concern. it's a concern because, you know, investors, households, people who want to buy a house, make new investment, hire people, would like to know what the environment is going to be like and what the fiscal deficit momentum and process will be in 2013. and more importantly, going forward so they appreciate exactly what environment they'll be in, what tax rates will apply, which loopholes will survive or not. >> which is why we increasingly hear executives, managers of sit on the money because they don't know what's to come. do you think after the u.s. election we'll have more clarity?
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i mean, when will things loosen up? >> as soon as possible would be desirable, is all i can say. >> my thanks to christine lagarde. will president obama's tax policies help or hurt small business owners? it's touchy election issue with a lot of vit reial on both sides. we'll have a debate on the other side of this break. coca-cola, goldman sachs, johns johnson & johnson due out tomorrow that will likely set the tone. we have a trio of top money pros telling you how to allocate capital. bob... oh, hey alex.
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welcome back. oon though president obama has been touting efforts to help enintranewerer and small business, a new report says his tax proposals will help not hurt small businesses. his plan would raise taxes on small businesses by $49 billion. a move the group says would lead to 200,000 fewer jobs in 2013. good to see you, gentlemen, thank you for joining me. the study suggests president obama's policies would significantly harm small business. how so? >> that's right. my colleague has a paper out over the weekend that describes
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both the relatively small tax cuts that president obama has passed into law for small businesses and the relatively large tax increases he's proposing, raising tax rates on small businesses almost 10 percentage points as a core element of his tax plan. >> richard, you say if there's going to be a real solution here, it's going to be a compromise on revenue. and you say that actually the president is helping small business. how? >> well, it's worse than that. their math is bad. their assumptions are all unfavorable to the president. the president understands that. this he differs from governor romney. if there's a way to deal with our long-term structural deficit, revenue's a part of it. how you talk about that, without this sort of broad-brush any tax increase is bad is part of our political culture these days. the fact of the matter is, the president's plan is fairer, more effective, more ee fishgt affic more likely to help small business. >> wait a second --
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>> actually -- >> go ahead. >> i was going to add. it's actually president obama who's suggesting he's cut taxes 18 times for small businesses. it's not very difficult to take a look at the tax code and realize that's not true. almost half those cuts have expired. and half of the remaining half were policies first created by president obama. >> even george bush was right once in a while. if president obama understood that sxection tended those tax breaks, then he ought to be given credit for an independent judgment reducing attacks on small business. you can't just be an anti-obama factory. there's going to be a debate about spending. there's going to be debate about revenues. and it's got to be fair. unfortunately, a lot of the stuff coming out ain't fair. >> well, we're having a debate right now on small business taxes. you know, one of the issues that i certainly hear a lot from small business is the fact that small business owners pay the ordinary income tax rate. so, if we're looking at that rate going from 35% or 36% to
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39%, small business taxes will go up. >> there are taxes that will go up under president obama's plan for the wealthiest americans as part of a way -- >> that includes -- >> -- out of the deficit. you think can you do it all with cuts, you're wrong. >> wait, wait, wait. let's talk facts here. you're talking about raising taxes on the highest earners, but that includes small business. >> it includes some small business, some large business -- >> that's raising small business. >> i haven't disputd that's part of the president's plan of dealing with long-term structural deficits. there's going to be a revenue component. if you think you can end the deficits merely by cutting discretionary spending, it's a fantasy. we need a real discussion about that. >> alex, what about that? >> i agree with that. i think if president obama was saying to deal with our structural challenges we need to raise taxes on small businesses, i think he'd be much more accurate about describing his own proposals. i also agree that we wha we need is a factual debate about what's
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going on. i agree that cutting discretionary spending is not the only way -- is not a sufficient way to get to the -- to sustainable situation. but when you look at the tax plan of the two candidates, governor romney is suggesting a 20% reduction in the statutory tax rate for all -- all ordinary income. small businesses, smallest size and of larger sizes. >> he says won't cause any increase reduction in tax revenues. come on. let's get real here. what governor romney did well in the debate is walk away from his previous commitment to cut taxes, change it into a promise to cut rates and deductions. in the end, there's no magic here. there's got to be an increase in revenues that help solve the deficit problem and a reduction in spending. >> so, where is the reduction in spending, then? let's talk about that, richard. where do you think should be cut in terms of spending? we're not really hearing the clarity on that part of the equation either. >> well, i'm pleased that my
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views on what would constitute a cut in spending are solicited. i have some ideas. >> what are they? >> health care. you have to do something about growth in medicaid. this is not rocket science. what's missing in debate is not concrete proposals from either side but a willingness to share a fundamental value. do you raise revenues as part of the work out or don't you? >> i think we all are seeing concrete proposals. i think we are seeing some concrete proposalproposals. it's a clear choice. the president said he wants to raise taxes on the highest earners and governor romney said he didn't want to raise taxes but cut spending and broaden the tax base but lower the taxes. so, that's -- that's a very specific, you know -- two different plans. >> they are very different. the notion you can cut these long-term structural deficits back into reasonable levels by cutting discretionary domestic loan is, in my judgment, a myth. it's a myth --
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>> i agree with that. i don't think anyone's suggesting that. in fact, i'd like to see president obama propose cuts to medicaid. >> right. >> i agree with you, richard. what we've heard from republicans are significant cuts to the medicaid program in a way that would drive that program to be more market-based, ultimately more efficient. >> thank you, gentlemen. we'll be watching this. tomorrow night, this will be front and center at the debates. cnbc will be covering it live. join myself and carl quintanilla tomorrow night at 8 p.m. fresh back of economic data out tomorrow morning. what's going do move your money? we're all over it next. in america today we're running out of a vital resource we need to compete on the global stage. what we need are people prepared for the careers of our new economy. by 2025 we could have 20 million jobs without enough college graduates to fill them. that's why at devry university, we're teaming up with companies like cisco to help make sure everyone's ready with the know how we need for a new tomorrow. [ male announcer ] make sure america's ready.
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with 30 seconds on the clock our next guests will tell us what they think will move the market and your money tomorrow. steven rosen and mark matson. good to see y'all. you are up first. what do you want to watch for
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tomorrow? >> so in the u.s. you have industrial production and capacity utilization. those will help to figure out how the manufacturing sector is doing. you have the national association of home builders. we will see if housing continues its rebound. a lot of big names reporting earnings. we will see if the falling dollar and the animal spirits help earnings. you will get economic sediment. >> that will set the tone for stocks. steve, what are you looking at. >> everything mentioned so far. we are watching the vix. as we head into the earnings season it is not a shock to see positive financials leading us in the beginning. i think tech might be weak. the vix will tell us how people are positioning forward. is europe going to be a concern coming back. i will watch vix as it is trending towards the low.
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a close below 15 is very bullish for stocks. >> mark over to you. 30 seconds on the clock. what do you want to look at? >> i am watching the election and the debate. we need an entrepreneur in the white house and not a community organizer. there are $2 trillion in corporate cash. capital needs to be invested in the market. that will not happen until we get a change in the president. i don't know where the next 20% is coming but the next 100% is up. >> we will be watching. we appreciate it. we'll see you soon. we'll be watching the open tomorrow and beyond. up next my thoughts of a practice everywhere you look and my thought on greece. jack, you're a little boring.
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finally today my observation on ostairity.
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this weekend imf managing director seemed t be backing away from two aggressive packages for greece. she said it didn't make sense to create a program that they could not handle. she said this is going in stark contrast to the germans who want their money paid back before new money follows bad. speaking in singapore german foreign minister said greece would not go bankrupt. the country already defaulted on private sector debt. the newly issued bonds are rallying. investor of miller tabak says the lack of a greek event with the traunch of money to greece has european markets trading better. the bonds are lower in spain. greece has said it will run out of money by the end of november. greece has admitted the coughers
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run dry at the end of november. we are aware that the efforts have been successful in stabilizing italy. at least interest rates in spain seem to have been somewhat contained. why are we debating whether or not greece should be allowed to eat up and not follow more osterity? another argument is that it could set up a domino effect. every few months greece says it is about to run out of money again. then we debate if austerity should be effective. are we delaying the inevitable that greece will exit at some point because it can't pay its bills? perhaps but maybe it could help stabilize, as well. before we go take a look at the day on wall street. financials and health care led the way to a 95 point

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